I am looking for help with Turbotax which seems to be calculating taxes wrong. The return is my daughters, she was married until Jan 31, 2022 and then separated and still is.
Marital status Dec, 31st 2021 Married.
Dec, 31st 2022 Separated.
She has already updated the CRA regarding the change.
I imported her info in from previous years and Turbotax still wants here spouses info. I have set her status to separated with the correct date of change. The program still wants his info for calculation of the Worker income tax benefit. As I don't know his income I left this blank.
There appears to be an error or problem with the program because it is now claiming him as an eligible dependent for the spousal amount because I have not entered any income in for him. This is resulting in a much larger return for my daughter than she should be getting. Regardless, now that they are separated his income should not effect her return and as stated the CRA is already aware of the change.
Is there any way to fix this using EasyStep?
Please fix the software as this is not correct.
My work around currently is to set up a completely new return for her as separated without transferring any data in for her from previous years Turbotax software.
If your daughter separated or divorced in 2022, the Canada Revenue Agency (CRA) will still require her ex-spouse’s/ ex-partner’s information. The info is needed for a number of reasons, like eligibility for certain credits or deductions, handling property they still own together, etc…
Also, as the couple only separated at the end of the year, for most of the year, they were still married. Things like the spousal amount will still be calculated for the time that they were still together.
Thanks,
I appreciate the response.
First you are incorrect, I stated she separated in Jan 31, 2022, therefore she spent most the year separated, only 1 month together. She does not want to claim any spousal amount, the split was not amicable with a no contact order, therefore it is unknown if her ex spouse made $0, $20,000, or $100000.
I have since searched the CRA website and I also believe only part of what you are saying is accurate. She has already let the CRA know of the split and as such they had already re-calculated her eligibility for other credits such as GST for the remainder of 2022 based on her separated status which carries forward into 2023. Her eligibility for benefits in 2023 year will not be based on a combined income for her and her spouse. Her eligibility for future benefits for 2023 are based on her marital status on Dec 31st, 2022 which was separated, thus only her income is applied towards eligibility. This is part of the reason they encourage you to update the CRA of your marital status 90 days after separation, not only because they like to know every detail of your personal life but also because they will recalculate your benefits for the rest of the year in her case, or take them away if you were to say get married or become common law and are no longer eligible.
Although you are technically correct schedule 5 should be filled out with her spouse's information to file the return accurately in the end it doesn't matter because here benefits are already calculated for 2023 based on her status on Dec. 31st 2022 and she does not want to claim the spousal amount since she was separated 11 or 12 month of 2022.
The frustrating part about Turbotax software is that after importing their data from the previous year there is no easy way to opt out of the claim for basic amount for her spouse since without knowing his income which I left it blank and as such it is calculating her taxes wrong and filing for a much larger return than she is likely eligible for or even wants to claim. I guess the easier way is to just put in an amount of income for him that is above the basic personal amount to make her ineligible to claim the spousal amount even though his income would be a guess and incorrect.
Either way Turbotax should make it easier to opt out of the spousal amount claim for separated returns, the way that is currently being calculated now is incorrect and could easily lead to filing a return with an incorrect and larger tax refund that would likely get flagged by the CRA.
Thanks again for the help.
Thank you AWALL1 for your detailed response. I am dealing with the exact same thing for my daughter’s return at the moment. If I take a guess at her ex-spouse’s unknown income her benefits go down but if I input 0 her refund is higher than it should be.
Do not import last year's tax return into this year's if there is a change of marital status. This will give you the option to not claim a spousal amount in your situation.
The CRA does require you to enter a Net Income for their "spouse" and advises you to estimate their net income- the only reason for this is that way your daughter will not need to pay back a refund she may have received that she may not have been entitled to receive.
You can contact the CRA for advice on what you should enter as Net Income at 1-800-959-8281
Thank you for choosing TurboTax.
As moderator Brenda points out there are two ways to do this, I realized afterwards as well.
Either start a new fresh return with no imported data and select the option she mentions. If you import data data you can enter a $$$$ amount for the ex spouse that is above the basic personal amount and TurboTax will calculate appropriately. I think early on in the profile pages under Introduction, Contact Info, Additional Personal Information there is the question Are you Eligible to Claim the Spousal Amount? Select No there and that will eliminate the benefit.
Glad my post could help a fellow filer, good luck!